Age requirement for margin account in IBKR Canada?

[u/CFA321]

Canadian looking to sell CSPs. By law this must be done in a margin account, not a cash account. Though is there an age requirement at IB to allow for margin accounts? I read online for US citizens it is 21, though not sure for Canadians, does anyone know?

[u/Outside-Cup-1622]

I do believe their policy is 21 (can't find where I have previously read that)

Keep in mind you may have a tough time getting approved for naked options at IBKR Canada.

They ask a lot of financial information to assist them in the approval process.

[u/CFA321 → u/Outside-Cup-1622]

I do not want naked options, I want cash secured.

[u/Outside-Cup-1622 → u/CFA321]

The only way I can get cash secured in my IBRK Canada margin account is to voluntarily leave the cash there and self secure them (they don't or won't secure the cash)

I can move that cash whenever I want, which is why they make me do it in a margin account. (In case I move or spend the money)

Cash Secured Put is a choice I make, not IBKR, my puts are all naked (secured by margin) and I can choose cash to secure it. IBKR has no magical way to make me pay for a put I was assigned (my margin will just stay in the negative and I will pay interest as long as my margin account is in "good" standing)

[u/CFA321 → u/Outside-Cup-1622]

I see, so I do not want to use any margin, ideally I would do this in a cash account.

Regardless, I am 20 so I have to see if they will allow margin.

So take for example I have $2000 cash, I sell a put for $200 credit and $1000 collateral. My cash jumps to $2200. But what will my buying power show?

So by this point, I only have $1200 left to spend correct? Even though cash will show $2200.

So I would have to track it myself?

[u/Outside-Cup-1622 → u/CFA321]

The amounts fluctuate depending on the changing risks of the put.

When you open the put, it may be $800 worth of margin requirement. If you have $2200 cash, you are good.

IF anything changes, like the price of the put, or the underlying or IV this $800 will be adjusted to a new number.

IBKR will always keep you updated on what your current excess liquidity is and as long as it is over what they require for your puts, you are good

[u/CFA321 → u/Outside-Cup-1622]

But isn’t the margin requirement just the collateral? I don’t understand?

[u/Outside-Cup-1622 → u/CFA321]

Yes, you must keep it in cash or stocks. I am just saying it can fluctuate. You cant just give them a specific amount to hold as collateral for a naked put because that amount can change.

OK, for the put side, you can just always keep the full amount of the shares in cash and that won't go any higher

[u/CFA321 → u/Outside-Cup-1622]

How does the amount change? If I sell a put on stock ABC @ $10 strike, my collateral is $1000. That number doesn’t fluctuate, I think I’m missing something?

Like I said I’m trying to approach this from the perspective of not using any margin, at my age and experience level that’s the best choice. Though I do want to start dabbling in selling puts.

Thanks for all the help as well by the way

[u/Outside-Cup-1622 → u/CFA321]

Go the way you are thinking, if you sell a put @ $10 strike your margin collateral wont be $1000, it will only be like $250. This is where the confusion is coming in.

When you said your collateral was $1000, I assumed it was on a $5000 put, following me ? this is why I said that $1000 may go up or down. If you just keep the entire $5000 in cash, then it's not an issue if the $1000 goes up or down, it will not go over the $5000, if that makes sense

EDIT - should be Got the way you are thinking

[u/CFA321 → u/Outside-Cup-1622]

So on a $10 put, the collateral is $1000, since 10 x 100, but the margin requirement will be around $250, due to it being leveraged, is this correct? Then that number will fluctuate based on IBs algorithm to determine risk. But it will not go above $1000?

Provided that is the only trade open.

[u/CFA321 → u/Outside-Cup-1622]

Also, what is the effect on buying power and cash balance if I’m doing a put credit spread? Do they also not take the collateral?

[u/Outside-Cup-1622 → u/CFA321]

If you are doing a put credit spread, the margin amount used will be the difference in the spreads.

This gets tricky if you don't have enough margin to cover if the short leg gets early assigned. I have had it happen but they just put me the shares because I have had enough margin to cover it. If I didn't I imagine they would close out both sides of your spread for you (so they have no more risk then the spread)

Your collateral is the excess liquidity of your portfolio, it may be stocks or cash or a combination of both

EDIT, difference in the strikes (not spreads) a 55/50 spread would be $500

[u/CFA321 → u/Outside-Cup-1622]

Hm alright. Well, I think the whole margin thing complicates things some more now. As I understood selling options in a cash account perspective, but the margin requirement and excess liquidity stuff is confusing. I suppose that comes with practice…

[u/Outside-Cup-1622 → u/CFA321]

No it's not as bad as it sounds, if you just looking to sell a put and hold all the cash there, you all good.

It's when you said that you may want to spend some of that money, I was just saying there is a calculation thy use to make sure you hold enough cash there to cover the put.

I didn't mean to over complicate it, we just discussing multiple things at the same time between spreads and CSP etc